Is your business doing these 3 things to protect its intellectual property?

Do you create for a living? Are you a graphic designer, a fashion designer or a software developer? Or do you need to hire one?

As a designer or developer, your business involves creating intellectual property (‘IP’) through your product designs, brand logos and phrases. So how do you protect your IP? What rights are you giving your client when they purchase a design or product from you? Your IP is a valuable asset and protecting it is critical to your business’s success. It is also important that your clients understand IP and know what they have purchased from you, and how they can use it.

Where do I start?

The default rule is that a contractor or third party business owns the IP that they create unless they assign or licence it to another business or party. For example, when you engage a developer in coding your app idea, he or she is the first owner of the copyright.

Below, we’ve set out three essential tips you need if you are a designer or developer, or if you hire designers to work for your business.

1. As a designer or developer, determine whether you want to assign or license your IPThe first tip for any designer or developer is to work out whether you want to assign or licence your IP. If you assign it, you sell it. Effectively, you transfer ownership to the customer through an ‘Intellectual Property Assignment Agreement’. If you assign your IP, you no longer own it and cannot use it again, unless you have an agreement with your customer to do so.

If you license it, you maintain ownership of the IP and the client can use it as set out in the specific conditions of a Licence Agreement. A license agreement often requires the client (licensee) to pay the designer or developer (licensor) a royalty or fee to use the IP. You may want to negotiate as narrow a license as possible, so you retain broad rights to the IP.

2. Have a legally binding agreement in place to transfer IP rightsAfter you have decided whether you want to assign or licence your IP, the second tip is to make sure you have a legally binding agreement in place between you and your client. An ‘Assignment’ or ‘Licence Agreement’ details the various aspects concerning the transfer of IP rights, including:

– Ownership retention of all of your pre-existing intellectual property.

– Carving out that you do not own (so cannot assign or licence) any third party intellectual property that you use, for example, open source software.

– Explicitly specifying whether you’re assigning or licensing the intellectual property that you create for your client, to your client. If you are licensing your IP to your client, you will need to create a licensing agreement, detailing the terms of use of the intellectual property and the fees associated with the licence.

3. Hiring a designer or developerIf you hire designers or developers to create IP for your business, you need to protect your business. You need a legal agreement to:

– Own intellectual property where possible, particularly if the concept is your idea and you are paying the designer or developer to bring your concept to life. You want a simple and broad intellectual property assignment agreement or clauses to assign intellectual property created for your business, to your business.

– Understand what third party intellectual property has been used, for example, open source software. You want the developer to warrant (a legally binding promise) to you that they have followed all rules and requirements in using that open source material. It is prudent to ask for a list of all open source material used.

– Where the designer or developer won’t assign the intellectual property, you want to negotiate as broad a license as possible.

The agreement should also cover moral rights. Moral rights are the creator’s rights to protect the integrity and ownership of their work. They concern the creator’s right to be property attributed and credited as well as the protection of their work from degrading treatment.

If your designer or developer is your employee, it is prudent to have an intellectual property assignment clause in your employment agreement. An assignment clause ensures that ownership of any IP created by the employee during their employment stays with the employer. Such a clause should include:

– The scope of IP that the employee will retain ownership of.

– Any IP that is excluded from the assignment clause.

Key TakeawaysWhether you are a designer or developer, someone who is purchasing IP from a designer or developer, or a company who employs a designer or developer, a well-drafted agreement it critical to your business’ success. Whether it’s an IP assignment agreement, IP licensing agreement or employment agreement, you should have something in writing setting out the transfer of IP rights. Such an agreement or clause gives both sides clarity and certainty as to who maintains ownership of the IP.

About Ursula Hogben

Ursula Hogben is the co-founder and General Counsel of LegalVision ILP, a commercial law firm, with free legal information, online services and fixed-fee prices. Follow Ursula on Twitter: @Ursula.Hogben